A Primer and a Debate on the Corporation Commission

Earlier this week, the candidates running to take, or keep, a seat on the state’s Corporation Commission held a debate.

And Arizona Public Radio’s Howard Fischer will have that story in a couple of minutes.

But if you haven’t a clue what the Arizona Corporation Commission is, you’re not alone.

I posed the question to several voters in downtown Flagstaff.

This first person has asked that I not use her name.

(MB) “What is the Corporation Commission?”

"I really couldn’t say.”

“Do you ever vote for the people who run for it.?”

“I probably do. I don’t know.”

“Robert Arnold, I live in Flagstaff Arizona”

“What is the Corporation Commission?”

“That, I’m not entirely sure.”

“Do you ever vote for Corporation Commissioners?”

“Not that I’m aware of.”

“Julia, and I live in Flagstaff, Arizona.”

“And what is the Arizona Corporation Commission?”

“I have no idea”

“Any idea from what their name is that might give you a hint what they do?”

“Some sort of corporation in Arizona (laughs). I have no idea, no.”

To be fair, some people I spoke with did know what the Commission does, but the majority didn’t.

And that doesn’t surprise Michael Grant.

“I think for many people, most people, it remains pretty much something of a mystery,” Grant said.

Grant is a Phoenix Attorney who regularly represents clients before the Commission.

So, Michael Grant, what is the Corporation Commission?

Well, let me hit the rewind button. It’s 1910, it’s the Arizona Constitutional Convention, and it’s at the height of the populist movement. And there’s a lot of suspicion about big oil and also the railroads, and the suspicion is that they have a lot of control of legislatures and governor’s offices nationwide.”

And so the Constitutional Convention, borrowing from other states, came up with the Corporation Commission.

The commission would regulate utilities and oil and railroad corporations "that would actually have some powers derived directly from the constitution so it won’t be wholly dependent on the legislature and furthermore states that its members will be popularly elected and will be independent of the governor’s office," Grant said.

And that way, the framers thought they could protect Arizona citizens from corporate abuses.

Grant says, the commission has the authority to regulate the five public service utilities.

Those are electric, water, natural gas, telephone, and sewer services, "so it has that primary jurisdiction and is given in the constitution the power to regulate their rates and charges.”

On the surface, few things are more boring than discussions of water and electric rates.

But those rates touch our pocketbooks every month when we open our utility bills.

They affect the costs of doing business for the state’s industry.

And they help determine whether the state’s utilities are attractive investments in financial markets.

But, Grant says, the commission also sets policy.

“Number one it’s taken a pretty aggressive role on re-newables and on requiring utilities to derive a certain percentage of their power from renewable sources as opposed to coal, gas, some of the more traditional sources,” Grant said.

And it’s required that utilities offer incentives to encourage conservation.

“You see advertising about power companies that offer rebate programs if you better insulate, perhaps if you’ll put solar on your rooftop, those are coming from policy decisions made by the Arizona Corporation Commission,” Grant said.

So now that you have a little better idea what the Corporation Commission does, let’s move on to our State House reporter Howard Fischer and his story about a recent debate among the candidates who want to serve on the commission.

(Fischer) The current rules require investor-owned utilities like Arizona Public Service to produce at least 15 percent of their power from renewable sources by 2015. None of the nine candidates for the three seats up for grabs suggests scrapping those regulations. But the three Republican contenders say they do not want to expand that mandate, at least not now -- and possibly not ever. Former state Senate President Bob Burns, trying for one of those posts, said during a debate this week at KAET-TV, the Phoenix PBS affiliate, that while more renewable energy is a nice goal, the current costs make it too prohibitive, as utilities are passing on at least part of the extra costs to their ratepayers.

"I think the economy is the critical issue here,"Burns said. "The increase in mandates costs money. Rates are affected by an increase in mandate. And so, in this current economic condition we are in, that increase in rates, I believe, would be very harmful to the overall economy of the state of Arizona."

That's also the contention of Susan Bitter Smith, another Republican also hoping to become a commissioner.

"Key to all this discussion, of course, is what it costs rate payers," Bitter Smith said. "And I think that's where the Republican team is focused in making sure we have renewable supplies, but at an affordable rate. Because ratepayers come first. And it's not a great economy right now to be juggling with a formula that's already working."

And incumbent Republican Bob Stump said a better answer is more reliance on natural gas given the explosion in production that he said should keep prices low. But Paul Newman, an incumbent Democrat on the commission, said that's a bad bet.

"Why more natural gas than solar when the price of gas is so volatile?" Newman asked. "Why create out of state jobs when we could create solar jobs in state and not energy jobs in another place? Why ignore our most substantial natural resource, the sun?"

The issue goes beyond the simple question of whether to mandate the use of renewable sources.

Sandra Kennedy, the other incumbent Democrat, pointed out that the Republican-controlled commission gave permission for a Mohave County utility to meet at least part of its renewable energy mandate by burning trash.

"My GOP opponents are living in the 19th century and have refused to continue to move Arizona forward," Kennedy said. "We can't move Arizona forward by allowing a trash incinerator as renewable energy? That's an oxymoron."

Stump disgareed.

"I find it ironic because it's President Obama's EPA which, in fact, classifies waste energy as renewable energy," he said.

That brought a sharp response from Democratic challenger Marcia Busching.

"We do have trash burning in the form of biomass, twigs, small plants, that kind of thing that is truly plants and green energy that is being burned," she pointed out. "And this is renewable energy. But when you put just garbage, rubber, plastics and things like that into a trash burning facility, an incinerator, it is no longer renewable."

And Green Party candidate Thomas Meadows took a shot at Bitter Smith's statement that the state should consider all sources of energy, including nuclear and what she called clean coal.

"There's really nothing renewable about nuclear power," Meadows said. "It creates more environmental issues than it helps. And there's no such thing as clean coal. There's no such thing as natural gas that's good for the environment."

The race also includes Daniel Pout, another member of the Green Party, and Libertarian Christopher Gohl.